Evolution: Manual to Computerized Accounting

2.1 Manual Accounting — Process and Limitations

In manual accounting, every transaction is:

1. Recorded in Journal (books of original entry)
2. Posted to Ledger (book of secondary entry — one account per page)
3. Balanced into Trial Balance (checking arithmetic accuracy)
4. Summarised into Financial Statements (P&L, Balance Sheet)

Limitations of manual accounting:

• Time-consuming — ledger posting is slow
• High probability of arithmetic errors (human error)
• Report generation requires days of work
• No real-time visibility into financial position
• Difficult to handle multiple currencies, branches, large transaction volumes

2.2 Transition to Computerized Accounting

The shift began in India in the early 1990s as computers became affordable. Key milestones:

• 1986: Tally Solutions (then Peutronics) founded in Bangalore — released first accounting software for Indian MSMEs.
• 1991: Economic liberalisation → foreign ERP systems (SAP, Oracle) entered India.
• 2000s: Network accounting enabled multi-branch real-time data.
• 2017: GST launch made computerized accounting mandatory in practice — manual GSTR filing is practically impossible for regular taxpayers.
• 2020s: Cloud accounting and AI-powered bookkeeping (auto-categorisation, OCR-based invoice capture).

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